Opec Puts Pressure On Rivals Over Price Slump

The head of Opec has laid the blame on smaller oil-producing countries for the glut in supply swilling through global markets that has driven down prices.

Brent crude slipped back from recent gains after the remarks from Abdalla el Badri, secretary-general of the Saudi-dominated body, in a speech in London.

The comments, putting pressure on non-Opec countries such as Russia to take action, weighed on hopes that Opec itself would take the lead in addressing the slump by cutting production.

Mr el Badri set out how a surge in production had sent the "overhang" or extra supply of oil supply in world markets to 260 million barrels at the end of last year, up from a negative level of 85 million in 2013.

He said in 2013 and 2014, non-Opec supply grew by more than six million barrels a day while Opec saw a contraction – though this partly recovered last year.

Mr el Badri said: "It is vital the market addresses the issue of the stock overhang.

"As you can see from previous cycles, once this overhang starts falling then prices start to rise.

"Given how this developed, it should be viewed as something Opec and non-Opec tackle together.

"Yes, Opec provided some of the additional supply last year, but the majority of this has come from non-Opec countries."

Mr el Badri said it was crucial that all major producers sit down to come up with a solution to the slump – which last week saw Brent crude fall to below $28, its lowest level since November 2003.

It had peaked at above $115 in the summer of 2014.

But markets instead appeared to view the speech as a hardening of Opec's rhetoric against outsiders such as Russia and America's shale oil industry.

Having topped $32 earlier in the session, it slipped back below $31. The price was also hit by figures showing record oil output from Iraq in December.